JetBlue Airways on Friday expressed doubts about completing its $3.8 billion merger with Spirit Airlines, saying it may not meet certain conditions required as part of the deal by deadline.
Spirit's stock price fell 17% after the announcement, adding to a loss of about 55% this month sparked by a U.S. judge's effort to block the deal.
The airline said it notified Spirit that the merger agreement could be terminated after Sunday because conditions were not met.
JetBlue said it continues to evaluate its options under the agreement and will comply with its merger obligations unless the agreement is terminated.
In response, Spirit said it had no basis to terminate the merger agreement and would continue to comply with its obligations, and said it expected JetBlue to do the same.
The cancellation of the contract may deepen Spirit's depression even further.
The airline has struggled to turn a profit due to rising operating costs and supply chain problems, raising questions about its ability to repay debt maturing next year.
Spirit announced last week that it is considering options to refinance its debt maturing in 2025, including $1.1 billion of debt maturing in 2025.
Earlier this month, a U.S. judge blocked a planned merger between the low-cost carrier and JetBlue, ruling that the proposed partnership could threaten competition in the U.S. airline market and harm ticket prices. Ta.
Both airlines announced that they would appeal the ruling.
But JetBlue is aware that Spirit's performance has deteriorated significantly since the two companies agreed to a partnership in July 2022, people told Reuters.
Citi analyst Stephen Trent wrote in a note that if the appeals court reaffirms the lower court's ruling, “JetBlue shareholders will have no idea that the airline will need to take on Spirit Airlines' large debt and cash-burning business.” “We may breathe a sigh of relief when it disappears.”
JetBlue shares rose 2% in early trading.
